Article ID: | iaor19992240 |
Country: | United Kingdom |
Volume: | 49 |
Issue: | 12 |
Start Page Number: | 1260 |
End Page Number: | 1269 |
Publication Date: | Dec 1998 |
Journal: | Journal of the Operational Research Society |
Authors: | Mesak H.I., Means T.L. |
Keywords: | game theory, statistics: regression, advertising |
Previous research suggests that a multinomial logit model of market share (MNL) is inappropriate for equilibrium analyses of advertising competition. This article shows that when employing simple tranformations of the advertising effort, the modified MNL model becomes useful in representing situations of diminishing returns to advertising and appropriate for advertising equilibrium analyses without additional difficulties in its empirical estimation. Using the modified MNL model, optimal advertising budgets together with their allocation over time are derived for both the cases of concave and S-shaped attraction (response) functions in a symmetric oligopoly.